California schools real estate dispute goes to court

With the advancements in educational technology, it is common for colleges and universities to offer courses online rather than having students live on campus or commute to classes. Because of this, many institutions save money by minimizing their physical presence. This is the situation in which California's Claremont School of Theology finds itself. However, the sale of institutional property is not always easy, and the school is currently embroiled in a real estate dispute with its affiliate, the Claremont Consortium.

The Consortium sold the property to the seminary in 1957, but the deed included a provision that gave the Consortium first options for repurchasing the land. If the seminary ever decided to sell the property, it would be sold back to the Consortium at fair market value or using a formula that calculated taxes and depreciation. However, when the Consortium made its offer of $12.7 million for land the seminary valued at over $25 million, the seminary objected.

According to the Consortium, its final offer of $14 million, which was also rejected by the seminary, was $10 million above the stipulation in the deed. While the seminary believes the deed's provision for calculating the land value expired in 1987, the Consortium says it was renewed in 2001. Both sides claim they are acting in good faith, but negotiations broke down quickly. The seminary recently filed suit against the Consortium.

The solution to their real estate dispute seems to hinge on the validity of a single clause in the original deed. If a California court finds that the clause is still valid, the seminary may have no choice but to accept the offer from the Consortium. However, even if the dispute is resolved, it is possible that the relationship between the two institutions may be irreparably damaged.

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